The Hindu Business Line : Higher turbine fuel price hurts IA

INDIAN Airlines may not be unduly perturbed over the appreciation of the rupee against the dollar, but it is on a sticky wicket as far as the average price of aviation turbine fuel (ATF) that it is required to pay for, from April 1 onwards.

Effective April 1, the average ATF price has escalated by Rs 220 per kilolitre from Rs 21,530 to Rs 21,750, airline officials confirmed.

Despite the halving of excise duty on ATF from 16 per cent to eight per cent in January this year, the prices which IA has had to pay for purchasing ATF have not come down.

Airline sources noted that the ATF prices on January 9 stood at Rs 21,900 per kilolitre, while it rose to Rs 23,130 on February 1. "The March 1 price was Rs 21,530 per kilolitre and now it has moved to Rs 21,750 from April 1," sources said.

IA forked out Rs 956.19 crore towards aviation fuel and oil for the year 2002-03. For 2003-04, the revised estimates of expenditure stood at Rs 1,057 crore.

While the hardening of ATF prices is a point of concern, the airline is not unduly perturbed about the appreciation of the rupee against the dollar.

"Any appreciation of the rupee will not largely impact the airline as IA has equal amount of operating revenues and expenses in dollar terms. The effect of appreciation on the revenue side will get neutralised by the effect on the expenditure," senior officials said.

Meanwhile, the abolition of the 15 per cent Inland Air Travel Tax (IATT) has led to a surge in number of passengers opting to travel by air in the domestic skies. During January this year, the month in which IATT was abolished, IA, on an average, carried 21,817 passengers per day on its aircraft. Official sources said that this figure rose to 22,640 the following month. In an effort to make travel by air more affordable, the Government, in early January, abolished the 15 per cent IATT.